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iShares Core Canadian Universe Bond Index ETF (XBB)
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iShares Core Canadian Long Term Bond Index ETF (XLB)
Q: These two have me scratching my head. I invested a few months back, believing that lower interest rates were likely ahead in 2024 and longer bonds would do well. After a decent start, they are drifting downwards which doesn't make much sense when no one seems to see higher rates headed our way. Is it de-risking going on, and other investments look better? Am I missing something here or is it just a case of having patience with the plan? Also, Happy New Year to all of you at 5i. al
5i Research Answer:
We think tis just a case of patience. With interest rate changes being telegraphed so far ahead, in a lot of cases, bonds have likely adjusted and priced in a lot of the initial rate cuts expected. XBB is up 7.5% over 3 months before distributions, as an example. Taking a bit of a breather and even having some ups and downs as markets grapple with what the interest rate outlook will actually look like is probably what is happening more recently.